From SWIFT to Stablecoins: Litigating the new payments ecosystem

As part of London International Disputes Week, Freshfields were delighted to host an event assessing the increasingly complex world of disputes arising from modern cross-border payments. Emma Probyn chaired the expert panel with the following speakers:

• Tom Clark, Partner at Freshfields
• Eoin MacLachlan, Barrister at Maitland Chambers
• Nuala Jackson, Director for Payments at UK Finance
• Adrian Morris, Associate Director for Digital Asset Recovery at Grant Thornton

The discussion confronted the challenges created by new payment methods, from instant bank transfers to digital assets such as stablecoins and Central Bank Digital Currency (CBDCs). The panel examined the range of legal issues arising in the context of Authorised Push Payment (APP) fraud, as well as the challenges of tracing and recovering digital assets across public blockchains. It concluded with views on the jurisdictional uncertainty that ensues when assets cross borders on decentralised networks. Read on for the key highlights of what we discussed if you couldn’t make it on the day, or if you could and you would like an aide memoire!

The new payments landscape

The backdrop for payments disputes is an increasingly complex payments infrastructure. Although the core framework has remained unchanged for decades, still running on retail rails that have been in place for years, there has been an explosion in new access models which place increasingly sophisticated payment mechanisms over this core infrastructure. A single payment journey can now involve numerous actors, creating significant legal, regulatory, and technological friction points that did not previously exist.

APP fraud: Who bears the burden?

The recent introduction of a mandatory reimbursement scheme (the Scheme) to protect victims of APP fraud has transformed the management of disputes in this area. The Scheme allows the majority of victims of APP fraud to recover losses up to £85,000 for transactions induced by fraud over the Faster Payments System or CHAPS from Payment System Providers (PSPs, typically large banks) (see more detail in our briefing). It resulted in reimbursement of almost 90 percent of claims in the first six months of the Scheme, significantly reducing the volume of the lower value cases that require litigation to resolve.

However, there are major exclusions – international payments, crypto exchanges, and civil disputes – where often the only recourse for the victim of the fraud is the courts. 

To recover these uncapped losses, claimants are testing the scope of the Quincecare duty following Philipp v Barclays Bank UK PLC [2023] UKSC 25 (see our blog on the decision here). There have been novel claims based on derivative actions arising on the grounds of a constructive trust (see Hamblin and another v World First Ltd and another [2020] EWHC 2383 (Comm)) and on behalf of a company used as a shell for fraud (see Hamblin and another v Moorwand Ltd and RND Global [2025] EWHC 817 (Ch)).

Looking beyond the Quincecare duty, claimants are relying on the retrieval duty on a bank to exercise reasonable care to recover fraudulently transferred funds. While the upcoming Hamblin v Moorwand decision, on appeal from the 2025 judgment , may offer clarity for sending banks (ie banks sending a fraudulent payment), the courts have indicated the duty will not apply to receiving banks (ie banks receiving a fraudulent payment). Both Santander UK plc v CCP Graduate School Ltd [2025] EWHC 667 (KB) and Larsson v Revolut Ltd [2024] EWHC 1287 (Ch) confirmed that receiving banks owe no duty of care to third-party payers due to insufficient proximity for a claim to arise (see our blog on the Santander case here).

Digital assets: tracing and recovery

In the digital assets space, the legal tools to address fraud are becoming clearer. In Yuen v Li [2026] EWHC 532 (KB), the High Court confirmed that the tort of conversion will not apply to cryptoassets given they are not a form of tangible property. Despite this, claimants are increasingly attempting to seek recovery through innovative claims based on breach of trust, constructive trusts, and unjust enrichment.

While digital assets move at speed and across borders, recovery processes have struggled to keep pace. Although the courts have shown remarkable flexibility in helping victims, the rules governing tracing and jurisdiction may be powerless if it is difficult or impossible to identify the location or destination of fraudulent payments. 

In relation to tracing, litigating against unknown fraudsters remains problematic. While interim relief is available against 'persons unknown', securing a final judgment can be more difficult. In Boonyaem v Persons Unknown and Others [2023] EWHC 3180 (Comm), the court refused final judgment due to difficulties identifying the defendant. Nonetheless, where service had been permitted by alternative means and the defendants are sufficiently identifiable, as in Mooij v Persons Unknown and others [2024] EWHC 814 (Comm), it may be possible to obtain summary judgment.

Practically, while blockchain is often considered positively because every transaction is recorded, tracing faces several hurdles. Assets are frequently moved into the internal ledgers of exchanges where mixing occurs, rendering traditional legal rules (such as ‘first in, first out’) unworkable. This can make it difficult to provide sufficient expert evidence to show the location of fraudulently distributed funds (see for example the complications arising from inaccurate expert testimony in D’Aloia v Persons Unknown and others [2024] EWHC 2342 (Ch) and Jones v Persons Unknown and others (No.2) [2025] EWHC 1823 (Comm)). Nonetheless, a recent case, Stephen Wilden v Person Unknown and another [2026] EWHC 1355 (KB), saw the High Court allow tracing on the basis of accurate expert evidence identifying the location of assets subject to multiple onward transactions and mixing with other assets.

Jurisdictional challenges

The law on jurisdiction has also had to keep pace with the changes in the payments landscape. Courts have moved away from asking where a misappropriation occurred to asking where an asset sits at the point an application is made — two different questions that can yield very different answers. Asset location was originally tied to an owner's domicile (Ion Science Ltd v Persons Unknown and others (unreported) [2020] (Commercial Court)) before being refined to residence (Tulip Trading v Van der Laan [2023] EWCA Civ 83). In Tai Mo Shan Ltd v Persons Unknown [2024] EWHC 1514 (Comm), the High Court demonstrated that location can shift depending on context, finding assets to be in New York for jurisdictional purposes for a freezing injunction but in England for recognition enforcement. 

In recognition of uncertainty in this area, the Law Commission has consulted on digital assets and electronic trade documents in private international law, with two notable proposals and an area of further assessment:

1. A new discretionary power to grant free-standing information orders against third parties, assisting victims who know they have suffered a wrong but cannot yet identify where they should litigate.
2. A 'supranational' approach to applicable law, moving away from requiring courts to identify a single governing law and instead weighing a range of factors including the legitimate expectations of the parties.
3. Although the Law Commission declined to support a specific crypto gateway for establishing jurisdiction (ie explicitly providing that the courts have jurisdiction when a crypto-token can be controlled from within the jurisdiction at the time when proceedings are issued), it sought views from stakeholders on its benefits.

The Law Commission’s final report, expected later this year, may provide greater clarity in this area, even if the timing of implementation of any reforms may be more uncertain (particularly to the extent that they require parliamentary time). 

What’s next?

As we look to the future, several other policy and regulatory initiatives are on the horizon:

• Pressure is mounting to expand the APP reimbursement scheme. The All-Party Parliamentary Group on Fair Banking has recommended extending the Scheme to international payments, noting that 11 percent of APP fraud losses in 2024 related to international transfers (up from 6 percent in 2023). There are also calls to extend the Scheme to cryptoassets, establishing fiat-to-crypto protections and a shared liability model where crypto deposit receivers would share 50 percent of reimbursement costs with sending PSPs. Related reforms of the Financial Ombudsman Service may see improved management of cases that cannot be settled under the Scheme (see our blog here).
• HM Treasury and the FCA are progressing with their Crypto Roadmap, with final rules expected to bring stablecoins and other cryptoassets within the regulatory perimeter next year. This regulatory integration will provide greater consumer confidence and may change the nature of disputes arising. 

With thanks to Lydia Backhaus, Senior Associate, Bernice Cheung, Trainee Associate and Rachel Hewitt, Knowledge Assistant, for their assistance with this blog.